Notifications & Messages

Jared Hamilton
From: Jared Hamilton
Hey - It’s time to join the thousands of other dealer professionals on DrivingSales. Create an account so you can get full access to the articles, discussions and people that are shaping the future of the automotive industry.
×
Michael Esposito

Michael Esposito President

Exclusive Blog Posts

How efficient is your sales process?

How efficient is your sales process?

Dealerships today operate in an environment where the consumer experience is a driving factor in dealership selection.  Ecommerce and other third-part…

Core Sales Skills Part 1: Show Empathy

Core Sales Skills Part 1: Show Empathy

  According to the DrivingSales Consumer Experience Study being empathetic is the number one factor that customers look for in a sales cons…

WEBINAR RECORDING - What Matters to Millennials in 2019

WEBINAR RECORDING - What Matters to Millennials in 2019

  For Millennials, there are many forces combining to complicate the car shopping process: an explosion of information sources, their overwhelm…

Google Ads Conversion Tools

Google Ads Conversion Tools

In this video blog, Jim shows that there's more than one way to get on board the conversion train in Google Ads. …

Why So Many Options If You Don't Pay Attention to The Source?

Why So Many Options If You Don't Pay Attention to The Source?

Is there a lot of thought that goes into deciding which call to actions to offer on the VDP’s? Or is it a constant free for all, or worse an aftertho…

Move Your Pre-Owned Metal

It’s been over 20 years since I managed a large Chevy store, but some things never change. Many dealers still have issues with the recon process and getting pre-owned inventory out to the front line in a timely manner.

The crux of this problem starts with pay plans and the fact that used car departments typically get a discounted rate for repairs. Service managers and service advisors are paid off gross, so if I’m a service manager and I have a customer in front of me that needs a brake job, shocks and tires and I’m looking at a RO estimate of $1,000, and $500 of that is gross, of course I’m going to prioritize that over a recon RO with $100 gross.

When I was a GM here’s how I solved this problem. I made a new rule: All used car repairs were paid the exact same rate as customer pay, otherwise known as door rate. Now, initially your used car manager isn’t going to like this. He or she might even go ballistic, and insist that it’s impossible to make any gross because now the cars are too expensive.

But here’s what I always found to be true. The gross you’re going to get is the gross you’re going to get, whether you’re working from a cost-up basis or a price-down basis. If the vehicle is too expensive after paying door rate for repairs, then you’ve appraised it wrong.

Let’s say a 2017 Cadillac XT5 comes in for trade. With the help of software tools such as vAuto, you can get pretty accurate appraisal and pricing parameters, as well as local market intelligence that gives you a good idea of how quickly this vehicle is likely to sell.

This data makes it easy to estimate what your gross margins will be after you’ve paid door rate for service. If the gross is too low, then you can’t offer as much for the trade.

If you’re having trouble finding vehicles, try what CarMax is doing. Offer free appraisals and offer to purchase any used vehicle, with no obligation to purchase. This saves you money in auction fees and transportation fees, which are getting to be ridiculous.

A bonus to this rule is that your service department makes more money, because you’re not giving away gross to the used car department. Service managers will prioritize recons the same as customer pay, and advisors and techs won’t be reluctant to work on them, because they’ll be getting paid better rates.

Of course, there’s a second part of the equation, which is how fast your pre-owned vehicles get to the front line. We all know there’s been a billion studies that show the faster you get a car to the front line, the more gross you’ll make.

Dispatch and workflow systems can help with this process, but the problem with these methods is that it requires manual entry by the parties involved. If the service manager delays entering the data into the system, you have no idea how long it’s taking. A repair order might take three days to close but the work was done on day one, and someone just forgot to close the RO.

While technology is a wonderful thing, sometimes an analog process can’t be beat. Here’s what I recommend. Every time a used vehicle is brought to the service department, immediately open an RO. Then take a crayon pencil and write the date and the RO number on the windshield. If all your recons are parked in the same area, it’s very easy for the GM to visually identify how long the cars have been sitting there.

I used to go out and check almost daily. If a car had been sitting there for more than a couple days, I would ask what the holdup was. Does it have an estimate? Are they waiting on parts?

The nice thing about charging door rate for your pre-owned repairs is that if you’re short on resources it’s a lot easier to justify hiring new techs, adding new service bays, extending hours or hiring an outside detailing company to help out, based on your volume. If you’re discounting all your recon repairs, it’s a lot harder to justify spending that money.

Try this and see if it works. The end result should be higher gross in service and the same gross in pre-owned sales, because the gross you’re going to get is the gross you’re going to get. If you try my super-sophisticated crayon recon method, you might even see a lift in pre-owned gross due to vehicles turning faster. Sounds like a win-win to me.

Martins Ville

So what's your word track for closing sales?  I think we live in a world where people dish out a ton of great information like you have but they're so many salespeople dying for need to know information on how to really close a customer. I have noticed that driving sales entirely exempt from a lot of that information.

Martins Ville

I would highly recommend the founders and contributors of this website to focus and dispatch and threads related exclusively to how to close the sale. Where are they?

Martins Ville

Let's stop beating around the bush and talk about what really is keeping people from closing deals. It's not prices, it's not the lack of proper attribution, it's because most sales managers and car dealerships have no clue how to teach their people how to close sales.

 Unlock all of the community & features  Join Now